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Coronavirus: Petrides welcomes decision by banks to forego compound interest on suspended loans

Finance Minister Constantinos Petrides

Finance Minister Constantinos Petrides on Friday welcomed the announcement by the banks’ association (ACB) that they would not charge compound interest on the deferred interest accrued from the suspension for nine months of loan installments.

In a written statement on Friday evening, the ACB said that in addition to the suspension of capital and interest installments, compound interest will not be applied to loans that fall under the provisions of the finance minister’s decree ordering all licensed banks in Cyprus suspend the collection of loan installments – including interest – until the end of the year.

The freezing of the loan instalments is arranged at the request of borrowers.

The banks went ahead with the decision based on legal and supervisory requirements, regulatory parameters and accounting standards.

“Banks continue to look at every possible option on a daily basis and study the available tools to support businesses, self-employed people and households with the main goal of reducing the economic impact of the Covid-19 pandemic on the Cypriot economy,” the ACB said.

“What was expected and was necessary was done,” Petrides said in a tweet after the ACB’s announcement.

He said the next step would be to stimulate liquidity for businesses through cheap loans based on the loan scheme the government is proposing.

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